Chambers USA recently released its rankings for attorneys across the country, and Law Week learned that over 150 Colorado attorneys made the cut. The prestigious designation was given to Colorado attorneys working across 20 different practice areas.
Law Week spoke via email with several attorneys awarded the designation in the general commercial, labor and employment and corporate mergers and acquisitions practice areas to discuss the trends they’re seeing and their outlook on the future.
Craig Stewart, a partner at Holland & Hart who was recognized for his general commercial work, told Law Week about the evolution of electronic communication tools in the workspace, and in turn, how the e-discovery space is evolving.
“Clients rely less and less on email, and more and more on communication tools such as Slack, Teams, Google Chat, and customer relationship management suites,” said Stewart. “Law firms typically aren’t on the leading edge of this shift and instead continue to rely internally on email communication. Lawyers must be aware that their communication methods don’t mirror their clients’, and they need to proactively harvest and consider all forms of client (and opposing party) communication.”
Interest Rates Slowing Deals
For the Colorado attorneys recognized by Chambers in the M&A space, a recurring theme popped up: interest rates. But the high rates arren’t stopping deals from being done, and there seems to be hope on the horizon as well.
“The M&A market generally hasn’t picked up as much as expected in the first half of 2024, largely due to the persistence of higher interest rates,” said John Elofson, a partner at Davis Graham & Stubbs. “However, we have seen deal flow in the middle and lower-middle market that has continued to be relatively strong. In addition, there’s a lot of pent up demand for deals, so we expect an increase in activity over the near to mid-term.”
Elofson was recognized by Chambers for his work in the corporate M&A space. Over the past year, that work included representation of PDC Energy, which was acquired by Chevron Corporation for $7.6 billion.
James Crowe, a partner at Holland & Hart, noted that the markets are tight compared to 2021 and 2022, but that deal flow is starting to open up. Crowe also highlighted a recent sale.
“The sale of Two Dot Consulting, LLC to Montrose Environmental Group is a highlight for Q1/Q2 from a sell-side perspective,” said Crowe. “It always feels great to sell a company that started in Colorado with local founders.”
Another partner at DGS, Brian Boonstra, said that the stabilization of interest rates and the anticipation of future rate cuts should help drive deal activity.
“Regulatory uncertainty may also hamper deal activity in certain industries, but the election will bring clarity one way or the other, which may also be a catalyst for future M&A activity,” said Boonstra. “And private equity capital remains robust, which continues to bode well for future dealmaking activity. Overall, we are optimistic that we’ll see a positive M&A environment during the second half of 2024 and into 2025.”
For Boonstra, a fun deal he was involved in recently was another local one.
“We advised in connection with the acquisition of Silverton Mountain ski area,” said Boonstra. “Most of my work involves businesses operating nationally and internationally, so it was fun to be involved in a transaction with a business that is so uniquely Colorado.”
Lyle Wallace, a member at Sherman & Howard, also pointed to the headwinds created by the interest rate environment.
“But because of the amount of private equity powder and cash on the balance sheets of strategic acquirers, deals are still getting done,” said Wallace. “Deal volume and deal values are up significantly year after year, and I see this continuing.”
Wallace added that while the M&A market isn’t as seller-friendly as it was in 2020, good companies are still being acquired at solid valuations.
One of the deals Wallace highlighted this year was his representation of the Colorado company EnviroTech Services in its sale to Monomoy Capital.
“It is always a great experience to assist great Colorado companies in realizing successful transactions and helping them take the next step in their evolution,” said Wallace.
A Shifting M&A Environment
The outlook ahead for M&A appears to be a good one, according to the attorneys Law Week spoke with.
“In the years following presidential elections, there is normally a significant increase in deal volume,” said Wallace. “I expect that to be true in 2025 as well. Once the market absorbs any potential changes in congressional makeup and what that might mean for tax and fiscal policy, I expect 2025 to be a very good year for M&A activity.”
In addition to the election, Wallace thinks there are two other factors that could lead to a busier environment for M&A attorneys.
“Changes in the interest rate environment by the [Federal Reserve] could have a significant impact on the psychology of the M&A market and could ease some of the current challenges in transaction finance,” said Wallace. “In addition, unless Congress acts, the lifetime estate and gift tax exemption is set to be reduced by 50% as of January 1, 2026. This could be a significant factor in sellers looking to do pre-transaction planning and engage in charitable and trust planning in 2024 and 2025.”
For Crowe, the interplay between employment-related noncompetes and M&A, following the Federal Trade Commission’s recent actions and resulting court decisions, is something that’s likely to impact the practice area.
“Those rulings, combined with Colorado’s relatively recent changes in the area, mean our M&A lawyers are working as closely as ever with our employment and benefits teams,” said Crowe.
The new environment around noncompetes is something Boonstra and his team are monitoring as well.
“Non-compete agreements are a common tool in most M&A transactions and any negative impact on their enforceability would require M&A lawyers to find alternative ways to achieve a buyer’s objectives,” said Boonstra.
Elofson thinks that two recent events could have an impact on the M&A environment going forward.
“The Elon Musk compensation saga and Tesla’s subsequent reincorporation in Texas, and the Moelis litigation in Delaware and subsequent response of the Delaware legislature, may suggest a greater openness to corporate governance structures that do not reflect ‘best practices’ as defined by ISS/Glass Lewis and some institutional investors.”
There’s another development in Delaware that Elofson has his eye on.
“Delaware looks set to adopt some statutory amendments that should resolve some technical M&A issues relating to damages recoverable by target company shareholders and the merger agreement approval process,” said Boonstra.
A More Complex Labor and Employment Environment
The past few years have been busy for the labor and employment world. More workers are unionizing, states, including Colorado, are updating their labor laws and companies are still grappling with the decision of returning to the office or staying remote.
Ashley Jordaan, a partner at Husch Blackwell and a Chambers-ranked attorney for the labor and employment practice area, told Law Week that there are two trends she’s seen in the space.
“Ever since the pandemic, I’ve seen a tremendous uptick in questions and requests for advice on mental health/disability and accommodation issues, as well as an increase in claims brought forth in that area,” said Jordaan. “We’ve also seen a rise in employee privacy issues that clients must navigate and have received more questions from clients on how to responsibly integrate artificial intelligence tools into their workforce.”
Barbara Grandjean, the Denver office managing partner at Husch Blackwell, said that the legal landscape for multi-state employers is becoming increasingly complex as individual states take the lead on employment laws.
“While federal laws and regulations often get bogged down in court cases challenging them in a handful of jurisdictions, other states take the initiative to craft the laws and regulations they want to see,” said Grandjean. “Colorado is a good example of a state at the forefront of several unique workforce issues, including AI, paid leave, and equal pay/pay transparency.”
Mary Will, a deputy general counsel and partner at Faegre Drinker, is also seeing more challenges in state law compliance for multi-state employers.
“For Colorado, we continue to see an active legislature that is regularly amending and adding to our employment-related laws,” said Will. “Other states are seeing similar legislative activity.”
One area Raymond Deeny, a member at Sherman & Howard, sees in a positive light are the recent U.S. Supreme Court decisions impacting employment and labor law.
“The Supreme Court correctly redressed the government agencies’ overreach,” said Deeny. “They also refocused the correct analysis of employment discrimination.”
“The Supreme Court’s decisions in the Harvard/North Carolina Cases, Starbucks and Loper Bright Enterprise cases will positively affect labor and employment law on a national and state level,” Deeny added.
Adapting to a New Noncompete Environment
A similar thread echoed through the attorneys’ responses to Law Week, and that was the new noncompete environment following the FTC rendering them largely unenforceable moving forward.
“All employment attorneys and their clients continue to be affected by and closely monitor restrictive covenant laws, particularly those involving covenants not to compete.”
Will noted that she and her team are closely watching developments on noncompete agreements at both the state and federal level.
But the new noncompete environment is not the only area the attorneys are watching.
“Colorado’s newly enacted state laws, which unnecessarily expanded protected activities, and the federal intervention in covenants not to compete and AI, are and will continue to have adverse impacts on business,” said Deeny.
Jordaan and her team are keeping a close eye on the pending Colorado Supreme Court case involving Amazon, incentive pay and overtime calculations.
“The Court’s interpretation of the Colorado Wage Act will likely have important ramifications in the labor and employment space,” said Jordaan.
She’s also interested in the new privacy and AI laws and how they will impact the landscape for employers, particularly the recently enacted Colorado AI Act.
Another challenge for employers that Grandjean foresees is managing reasonable accommodation issues, including leaves of absence.
“The federal Pregnant Workers Fairness Act should be on the radar for all employers, with its requirement to accommodate known limitations related to pregnancy, childbirth, or related medical conditions,” said Grandjean.
She added the PWFA includes some accommodation requests that are already covered under other laws, such as the Family and Medical Leave Act and Americans with Disabilities Act, but also some novel accommodation requirements. And, unlike the FMLA, Grandjean noted that there is no waiting period for accommodations under the PWFA.